Renters still have some room to negotiate in a rental housing market that isn't as robust as landlords would like.
In the last two months, the fourth rental market report laced with caution comes from the National Multihousing Council's (NMHC) "January 2007 Quarterly Survey of Apartment Market Conditions" which puts its Market Tightness Index at the lowest level in three years.
"The survey does hint at a possible cloud on the horizon with more than one-fifth of respondents saying that market conditions were looser over the past three months. While it's too early to say there's a problem, the increase in the number of condos and single-family houses in the rental market may dampen the otherwise positive outlook for the apartment industry," says Mark Obrinsky, NMHC's chief economist.
For renters who had begun to face a tighter rental market, that means their could be growing room and time to pick and choose the best deal, if not haggle for more affordable rental terms.
The apartment market got a boost beginning as long ago as 2005 as the high-flying owner-occupied housing market began to force shelter seekers into more affordable rentals. By 2006 rental rates were taking off.
Now, just as quickly, they may be leveling off.
The current NMHC report contained pretty much the same sentiment as the recent National Association of Homebuilders Washington Hotline newsletter report "New Multifamily Data Forecasts A Bumpier 2007."
"The inventory of condos units that haven't been sold -- some of which are winding up in the rental pool -- is also complicating the picture," the newsletter reported.
Likewise, the Federal Reserve's first "Beige Book" of the year offered anecdotal reports from realty market experts around the nation who chimed in about rental market concerns due to an over supply.
Finally, in Novato, CA-based RealFacts's latest report on markets in 15 states, renters revolting over reluctance to pay fast rising rents was beginning to push up vacancy rates.
"Such wide spread declines in occupancy likely herald reductions in rent growth rates," according to RealFacts.
A precursor to NMHC's latest report, its previous report, released in early November, 2006 revealed a Market Tightness Index had dropped from 85 to 70, then the lowest level in two years with 55 percent of industry leaders responding to the survey indicating tighter market conditions, compared with 14 percent reporting looser conditions and 31 percent reporting no change.
An index reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.
In the current report, the Market Tightness Index is now at a three year low, after slipping to 54. This time, only 29 percent of respondents reported tighter market conditions compared to three months ago. Conditions were generally unchanged, according to 49 percent of respondents and 21 percent reported seeing market conditions as looser.
NMHC said while the current index is a three year low, it represents 14 consecutive weeks the index has been above 50, indicating demand for apartments has been improving during that time. However, the rate of improving demand is declining.
Some of the dwindling demand could be due to renters changing their minds as home prices in many markets remain flat or decline.
Earlier this month, PMI Mortgage Insurance Co. reported increases in the risk-of-price-decline indexes for 34 of the nation's 50 largest Metropolitan Statistical Areas (MSA).
"Over the long-term, however, fundamentals for the (rental) industry are extremely positive," said Obrinsky.
"Thanks to the echo boomers -- the children of the baby boomers -- the population aged 20-34 (the prime renter group) will increase by 3.5 million. Strong levels of immigration will also create new demand for rental housing," he added.
Conversely, potential renters and existing renters facing rent hikes could wager buying is a better bet if interest rates continue their latest upward trend and home prices tumble.
